Criticism of health insurance premiums is growing. Citizens who have taken out health insurance for many years naturally find the increase this year too high. So what do the numbers say? Who gains from this business? Turkish Statistical Institute (TUIK) figures do not reflect the increase in health insurance. According to TUIK, the increase was only 38 percent. On the other hand, drug prices increased by 128 percent and basic hospital fees increased by 58 percent. Health inflation was 66.6%. Considering the health inflation and health insurance figures of TUIK, there seems to be nothing to complain about. But this is not the case, and this is not the reality.
According to the data on the website of the Insurance Association of Turkey, health insurance premiums collected from citizens who have taken out health insurance increased by 85% from 6.5 billion liras to 12.1 billion liras in the first 9 months of last year. On the other hand, the number of health insurance holders could only increase by 6 percent. In other words, the 85 percent increase almost reflects the average price increase. Let’s open a parenthesis here and add that other issues such as age and insurance company’s policy that affect the damage and premium for each policyholder may affect the premium amount and that premium increases may vary from person to person. In other words, the analysis we are trying to do refers to the averages.
DAMAGE / PREMIUM RATIO 84 PERCENT
The figures for the first 11 months show that the premium increases correspond to a 95 percent increase. In 11 months, insurance companies earned TL 8 billion in premiums in the previous year, while this figure reached 15.5 billion. However, since we have data for the first 9 months regarding the damage paid by companies against these payments, we will continue with the data for three quarters.
In the data on the website of the Insurance Association of Turkey, we see that the hospital and medical transaction costs (damage) paid by companies in the first 3 quarters of 2022 increased by 86% from 5.4 billion liras to 10.2 billion liras. In the first 9 months of 2021 and 2022, companies have paid 84 lira of every 100 lira premium they received as damage. So the damage/premium ratio hasn’t changed. Against this, the profit of the insurer decreased from 1.5 billion liras to 968 billion liras. In other words, it decreased by 36 percent.
PHYSICIAN FEE INCREASED 87 PERCENT
Insurance companies point to hospital and medical procedure fees as the main factor in the price increase. The Turkish Medical Association determines these fees by announcing a coefficient every year. The coefficients determined by the TTB represent an increase of 87 percent in 2022 and an increase of 164 percent from last year. The coefficient, which was 10.7 at the end of 2021, was increased to 14.56 with an increase of 36 percent, and then to 20.02, which corresponds to an annual increase of 87 percent, as inflation was very high last year. This year, the coefficient was 28.3. This figure represents a 164 percent compound increase compared to 10.7 percent at the end of last year. On the other hand, hospitals reflect the increasing extraordinary costs such as energy, especially the minimum wage, and the insurance companies.
INFLATION EXPECTATION
Another important factor in the premium increase is the expectation of inflation. First of all, insurance companies, which paid expensive damages towards the end of the year due to the premiums determined at the beginning of last year, reflect this loss on their premiums. On the other hand, the inflation expectation until the end of 2023 pushes insurance companies to increase their premiums in line with the expected inflation in order to avoid loss in the rest of the year.
